Commr. of C. Ex. Vs. Tubular Bag Manufacturing Co. - Court Judgment

Excerpt:
1. this appeal from revenue was argued by shri satnam singh, senior departmental representative. the respondents were represented by shri k.s. ramabadran, learned advocate.2. as narrated in the order-in-appeal, the appellants manufactured flat woven fabric out of polyester yarn under sub-heading 5504.29. the width of the fabric was 858 mm with selvages at intervals of 210 mm. this was to facilitate separating the entire width into 4 strips. the weaving was such that the fabrics were composed of two layers which fabric cut at required intervals produced fabric of tubular configuration. the fabrics were later dipped into ph resin and used as separaters in electric batteries. the assessee had claimed classification under heading 5507.00 for the woven fabric and under heading 5903.29 for the coated fabric. however, under protest they filed a classification list for the woven fabric under heading 5806.00. the assistant collector confirmed the classification of the woven fabric under heading 5806.00.he accepted the classification of the coated fabric under heading 5903.29 and extended the benefit of notification no. 217/86-c.e., dated 1-3-1986, since it was used for captive consumption. the assessee challenged this before the collector (appeals). the collector (appeals) classified the woven fabric under heading 55.07. he held the processed fabrics to be not marketable and, therefore, not excisable. in the appeal from the revenue the claim made is that the woven fabrics are correctly classifiable under heading 5408.00 in terms of the collectorate's trade notice no. 279/88, dated 21-12-1988. it was argued that the processed fabrics were correctly classifiable under sub-heading 6301.00.3. at the out set shri k.s. ramabadran, learned advocate claimed that appeal from revenue covers the issue of classification which was before neither of the lower authorities and oh this count the appeal is not maintainable. we have examined the available case law on this subject.in their judgment in the case of roots auto product (p) ltd. v.collector of customs, reported in 1988 (38) e.l.t. 310 (tribunal); it was held that a fresh classification could be claimed for the first time before the tribunal because it involved a point of law. the supreme court in their judgment in the case of shri rama machinery corporation (p) ltd. v. collector of customs, reported in 1992 (57) e.l.t. 369 (s.c.) also held that the alternate classification was claimable at the tribunal stage. the supreme court in their judgment in the case of collector of customs v. enfield india ltd., reported in 1991 (51) e.l.t. 172 (s.c.) had entertained the claim for a alternate classification made before them but had remanded the same to the tribunal for considering the alternate classification. we, therefore, hold that the revenue is justified in raising a fresh classification before us at this stage also. at this stage we have considered the plea of shri satnam singh, the learned senior departmental representative that the issue involving examination of facts needs to be referred back to the lower authorities for further examination. we find that in this case their is sufficient material available on record in the form of the two lower orders which would enable us to examine the claim of alternate classification.4. as regards the woven fabrics, the claim by revenue is that it is classifiable under heading 5408.00 in preference to heading 5507.00 as held by the collector. we have examined the coverage of the two chapters. chapter 54 covered man-made filaments. chapter 55 covers man-made staple fibres. the classification of the fabrics under these two chapters would necessarily follow the classification of the yarn the fabrics were made from. in the order of the collector (appeals) in the narration of the facts it has come that the woven fabric was made out of polyester yarn of sub-heading 5504.29. this sub-heading covers yarn of synthetic staple fabrics. heading 5507.00 covers fabrics of man-made staple fibres. where the yarn was made of staple fibres, the resultant fabrics has to fall under heading 5507.00 only. on this clear ground we find no substance in the plea for alternate classification made by the revenue. as regards the processed fabrics, we find that the assessee after claiming its excisability under heading 5903.29 changed their stand before the collector (appeals) who proceeded to hold that the goods were not marketable. it is not denied that this very fabric was used captively consumed by them. the belief of the collector is not borne out from the fact before him. no tests were conducted or no opinions were sought to determine the merits of the plea. in these circumstances, the findings of the collector (appeals) that the goods were not excisable has to be set aside. the revenue in the appeal before us has suggested classification under heading 6301.00. this is a residuary classification and the issue whether this classification is attracted would have to be determined on examination of contended facts. the tribunal cannot do this. this examination will have to be done by the original authorities. on the point of classification of the processed fabrics alone, we remand the case back for determination in de nova proceedings to the jurisdictional assistant commissioner. this appeal from revenue is thus partly allowed.

Judgment:
1. This appeal from Revenue was argued by Shri Satnam Singh, Senior Departmental Representative. The Respondents were represented by Shri K.S. Ramabadran, learned Advocate.

2. As narrated in the order-in-appeal, the appellants manufactured flat woven fabric out of polyester yarn under sub-heading 5504.29. The width of the fabric was 858 mm with selvages at intervals of 210 mm. This was to facilitate separating the entire width into 4 strips. The weaving was such that the fabrics were composed of two layers which fabric cut at required intervals produced fabric of tubular configuration. The fabrics were later dipped into PH Resin and used as separaters in electric batteries. The assessee had claimed classification under Heading 5507.00 for the woven fabric and under Heading 5903.29 for the coated fabric. However, under protest they filed a classification list for the woven fabric under Heading 5806.00. The Assistant Collector confirmed the classification of the woven fabric under Heading 5806.00.

He accepted the classification of the coated fabric under Heading 5903.29 and extended the benefit of Notification No. 217/86-C.E., dated 1-3-1986, since it was used for captive consumption. The assessee challenged this before the Collector (Appeals). The Collector (Appeals) classified the woven fabric under Heading 55.07. He held the processed fabrics to be not marketable and, therefore, not excisable. In the appeal from the Revenue the claim made is that the woven fabrics are correctly classifiable under Heading 5408.00 in terms of the Collectorate's Trade Notice No. 279/88, dated 21-12-1988. It was argued that the processed fabrics were correctly classifiable under sub-heading 6301.00.

3. At the out set Shri K.S. Ramabadran, learned Advocate claimed that appeal from Revenue covers the issue of classification which was before neither of the lower authorities and oh this count the appeal is not maintainable. We have examined the available case law on this subject.

In their judgment in the case of Roots Auto Product (P) Ltd. v.Collector of Customs, reported in 1988 (38) E.L.T. 310 (Tribunal); it was held that a fresh classification could be claimed for the first time before the Tribunal because it involved a point of law. The Supreme Court in their judgment in the case of Shri Rama Machinery Corporation (P) Ltd. v. Collector of Customs, reported in 1992 (57) E.L.T. 369 (S.C.) also held that the alternate classification was claimable at the Tribunal stage. The Supreme Court in their judgment in the case of Collector of Customs v. Enfield India Ltd., reported in 1991 (51) E.L.T. 172 (S.C.) had entertained the claim for a alternate classification made before them but had remanded the same to the Tribunal for considering the alternate classification. We, therefore, hold that the Revenue is justified in raising a fresh classification before us at this stage also. At this stage we have considered the plea of Shri Satnam Singh, the learned Senior Departmental Representative that the issue involving examination of facts needs to be referred back to the lower authorities for further examination. We find that in this case their is sufficient material available on record in the form of the two lower orders which would enable us to examine the claim of alternate classification.

4. As regards the woven fabrics, the claim by Revenue is that it is classifiable under Heading 5408.00 in preference to Heading 5507.00 as held by the Collector. We have examined the coverage of the two Chapters. Chapter 54 covered man-made filaments. Chapter 55 covers man-made staple fibres. The classification of the fabrics under these two Chapters would necessarily follow the classification of the yarn the fabrics were made from. In the order of the Collector (Appeals) in the narration of the facts it has come that the woven fabric was made out of polyester yarn of sub-heading 5504.29. This sub-heading covers yarn of synthetic staple fabrics. Heading 5507.00 covers fabrics of man-made staple fibres. Where the yarn was made of staple fibres, the resultant fabrics has to fall under Heading 5507.00 only. On this clear ground we find no substance in the plea for alternate classification made by the Revenue. As regards the processed fabrics, we find that the assessee after claiming its excisability under Heading 5903.29 changed their stand before the Collector (Appeals) who proceeded to hold that the goods were not marketable. It is not denied that this very fabric was used captively consumed by them. The belief of the Collector is not borne out from the fact before him. No tests were conducted or no opinions were sought to determine the merits of the plea. In these circumstances, the findings of the Collector (Appeals) that the goods were not excisable has to be set aside. The Revenue in the appeal before us has suggested classification under Heading 6301.00. This is a residuary classification and the issue whether this classification is attracted would have to be determined on examination of contended facts. The Tribunal cannot do this. This examination will have to be done by the original authorities. On the point of classification of the processed fabrics alone, we remand the case back for determination in de nova proceedings to the jurisdictional Assistant Commissioner. This appeal from Revenue is thus partly allowed.